U.S. stock futures are trending higher heading into the open, as Wall Street digests holiday sales data streaming in from Black Friday. According to the National Retail Federation, sales are on track for a 3.7% year-over-year gain due to strong online sales. At last check, futures on the Nasdaq Composite, the S&P 500 Index, and Dow Jones Industrial Average were all higher by an average of 0.15%.
In the options pits, Wednesday’s volume was well below the past month’s average, though low volume was to be expected due to the Thanksgiving holiday. Put options regained their footing on Friday, as the CBOE single-session equity put/call volume ratio rose to one-week high of 0.76. The 10-day moving average held at 0.74.
On the equity options front, Apple Inc. (NASDAQ:AAPL) was reiterated at “outperform” at FBR Capital after Black Friday Apple store checks revealed growing interest in the Apple Watch. Elsewhere, Facebook Inc (NASDAQ:FB) caught option trader attention following a search partnership with Alphabet Inc. (NASDAQ:GOOG), while volume swelled on Walt Disney Co (NYSE:DIS) after the company reported that ESPN subscribers fell by 3 million year-over-year.
Apple Inc. (AAPL)
FBR Capital reiterated AAPL stock with an “outperform” rating on Friday after analyst Daniel Ives said that data showed increasing interest in the Apple Watch. Per Ives’ report, “this morning, we heard of ramping interest/sales among consumers based on our conversations at various Apple, Target, and Best Buy stores.” Apple has struggled in recent months due to perceptions of a lukewarm reception for the Apple Watch. A turnaround in holiday sales for the wearable could be big for AAPL stock.
Option volume was brisk on AAPL for a holiday session. More than 254,000 contracts traded on the stock, with calls accounting for 63% of total volume. Turning to weekly December 4 series options, AAPL options traders have maintained their attention on the overhead $120 and $121 strikes, with 17,762 contracts and 11,177 contracts open at each, respectively. As for puts, 10,766 contracts reside at the out-of-the-money $110 put strike.
Facebook Inc. (FB)
FB stockholders had a lot to crow about last week. The company formed a partnership with Alphabet to help the FB app with indexing on Android devices. The deal boosts FB’s app presence on Android and aids Google in acquiring key data on mobile user search. Additionally, MKM Partners highlighted Facebook as a leader in the VR market it estimates to be worth $10 billion by 2020. Facebook’s Oculus Rift is expected to roll out in the first quarter of 2016.
FB options traders weren’t shy with call options on Friday. Volume topped out at 122,230 contracts on the session, with calls accounting for 72% of the day’s take. As for the weekly December 4 series, FB options traders currently hold significant open positions at the overhead $107 strike (8,114 contracts) and the $106 strike (6,037 contracts). Put activity has been considerably less brisk, with peak OI totaling just 3,211 contracts at the $104 strike, with another 3,501 contracts at the $102 strike.
Walt Disney Co. (DIS)
ESPN continues to hemorrhage subscribers, with the latest reports underscoring the evaporation of 3 million subscribers during the most recent fiscal year. Disney is calling the declines “modest,” but analysts and DIS stockholders are becoming increasingly nervous amid this growing trend.
Despite low overall volume in the options pits, DIS saw above average short-term volume on Friday. A total of 102,874 contracts traded on the session, with calls maintaining a slight edge with 57% of the overall take. For the December 4 series, options traders have loaded up on $110 puts on DIS, with OI totaling 10,537 contracts. By comparison, peak call OI for the December 4 series totals just 3,133 contracts at the $120 strike.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
